Richard
Russell (07/01/05): �From here on, we're forced to guess at the future
of the ratio {Dow to Gold Ratio]. Will the cycle continue as it has
occurred before, and will the ratio decline to 1, 2 or 3? My guess is
that it will. And if so, where will gold be, and where will the Dow be?

�I'm
going to hazard a guess. I think we'll see the gold to Dow ratio decline
to near 1. If the ratio is going back to 1, my guess is that we'll see
both gold and the Dow at around 2000 to 2500. Fantastic, impossible,
absurd? Never use any of those words about the markets -- where the
markets are concerned, anything can happen!�

Jas
Jain (07/04/05):
�I think that the ratio will be well below 1, say, 0.1-0.2.
Gold above $5,000 an ounce and Dow below 1,000. ...There is nothing like
a prolonged depression to bring all the skeletons out of the closets.
Thus far, only token skeletons have been shown to the public just to
maintain public�s confidence.

�It
is the Fraud, Stupid! (That will shoot up gold into stratosphere and shoot
down Dow to the ground)�

Comments
from a reader: �Hi Jas ...fascinating email but very shocking. First, if
we agree that the markets are manipulated, it would be very difficult
to believe that "they" would destroy the market down to a Dow
2000 and ruin all their friends who own big financial houses etc. That
would literally
destroy not only portfolios around the world, but collapse everything�.�

Reply:
No, we don't �agree that markets are manipulated;� markets are intervened
to a small degree but it is the public that is very easily fooled, or
manipulated. Shame on the Wall Street manipulators, but also shame on
the manipulated.

Relevant
Historical Facts For Dow Below 1,000

I
realize that many of my market predictions look �shocking� or beyond
the imagination
of most people. I have not made a single prediction that is not based on
identifying the relevant historical period and then make the prediction
based on that period. As Mark twain so famously said: History does not
repeat but it rhymes. In the case of the economy and stock markets it
rhymes beautifully.

First,
I needed to identify the relevant historical period and that job was made
real easy by the study of the economic Longwave and the behavior of the
stock market during the various completed phases of the Longwave.

Here
are the time equivalences for the stock market that I have come to conclude:

1.
June 1920 & August 1982 (Transition from Inflationary Recession to Disinflationary
Growth)

3.
June 1932 & 2006-09 (the worst of Deflationary Depression);
postponement does
not mean avoidance.

The
stock market low during the 1932 was very close to the low during 1920. Using
equivalences 1 and 3 above I expect that the low during 2000s will be
very close to the low during 1982. The necessary condition for this is
that we have outright deflation in prices of most goods and services
that lasts at least 12 months, but likely 2-3 years. It would be
impossible to avoid outright depression, under the current household
debt levels, if we do have outright deflation that lasts 12-36 months.

Also,
the low during 1932 was at the same level as the level first achieved 49
years before that low! Hence, we can have a low in 2013, or before, at a
level that was first attained in 1964.

I
fully concede that Dow will not go below 1,000 unless we have very
painful outright
deflationary depression that lasts minimum of 12 months but most likely
24-36 months. I know that Consumption Debt is inflationary in the
present and highly deflationary in the future. This is for the very
simple reason that if you borrow and consume today you must forego
consumption some time in the future. This inevitable meeting with the
reality can only be postponed so long; most American households will be
summoned for those meetings in exponentially increasing numbers over the
next 5 years.

Greenspan
has already listened to and implemented �His Masters� Voice� of
bankrupting at least 50% of the American middle-class households. For
every bankrupt American household, the Bankrupters of New York City have
already made a profit and put it in the �bank,� the US Treasury
Dept. What would be American Fraudulent System without the conflicts of
interests and perverse incentives? If future bankruptcy for someone
equals profits for someone else without any liability what do you think
will take place? What a wonderful �free market� system have we got
where a person can make billions without risking a single penny of his
own money and risking hundreds of billions of OPM. All human
institutions can be perverted and the American Financial System
is more of American Fraudulent System than not.